AFR in the News: Reform groups use Goldman critique to push for tougher rules

“Advocates for tough implementation of financial reform are saying that a head-turning op-ed from a former employee of Goldman Sachs proves the need for strict rules on the financial sector. In a blistering piece published Wednesday by The New York Times, Greg Smith announced his resignation as an executive director at the firm, while offering a lengthy takedown of what it has become. He argued that under current leadership, Goldman had placed its own profit-hunting ahead of the well-being of its clients, who he said were called ‘muppets’ behind closed doors. …Americans for Financial Reform issued a statement saying Smith had ‘laid bare’ problems that ‘remain pervasive at our largest banks.’ The proper prescription? Tough implementation of the ‘Volcker Rule.’ That key piece of Dodd-Frank is intended to prevent ‘proprietary trading’ by banks, which are trades made purely for the profit of the firm and not at the behest of clients. And AFR says it is ‘aimed at precisely the problems Mr. Smith describes at Goldman Sachs,’ calling on regulators to issue a strong proposal implementing it. ‘Mr. Smith’s statement today, along with the mountains of evidence from the financial crisis, demonstrates yet again how much we need a Volcker Rule that works,’ the group said. …The liberal Public Citizen used the op-ed to push back against ‘a barrage of self-serving industry comments,’ noting that Goldman alone sent two separate letters and visited with regulators six times. ‘Regulators should put Smith’s candid and brave words on the top of any analysis about how best to reform Wall Street,’ said Bartlett Naylor, a financial policy advocate for the group. Click here for more.